Bloomberg News

Hungary Price Surge May Delay Rate Cut, Citigroup Says

April 11, 2012

Hungary’s inflation, the fastest in the European Union, slowed in March on food costs.

Consumer prices rose 5.5 percent from a year earlier after a 5.9 percent increase in February, which was the fastest since March 2010, the statistics office in Budapest said today. The inflation rate matched the median estimate of 17 economists surveyed by Bloomberg. Prices rose 0.8 percent from February.

The Magyar Nemzeti Bank, which targets 3 percent inflation, on March 27 kept the benchmark interest rate unchanged at 7 percent, the EU’s highest, for a third month, citing delays in the government’s talks for financial assistance from the International Monetary Fund. The central bank also raised its inflation forecast.

The central bank last month forecast an average inflation rate of 5.6 percent in 2012, up from a previous estimate of 5 percent, and 3 percent in 2013, more than its previous forecast of 2.6 percent.

Food-price growth was 4.7 percent in March from a year earlier after a 6 percent increase in February. Household energy costs rose 6.8 percent after jumping 8.1 percent in the previous month. Services-costs growth slowed to 4.1 percent from 4.5 percent.

Alcohol and tobacco prices rose 10.8 percent in March from a year ago after a 7.6 percent increase in the previous month. On the month, fuel prices rose 1.2 percent and the price of alcohol and tobacco rose 3 percent.

The core inflation rate, which strips out volatile energy and food prices, rose 5 percent in March from a year earlier after rising 5.4 percent in February.

To contact the reporter on this story: Zoltan Simon in Budapest at zsimon@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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